SBP:NAMA plan to protect large developers from collapse.

patslatt

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Because FF are the builders party first and foremost.......these guys have funded FF and have also broken bread with them for years. Dunne was with Ahern in Washington, McNamara is a former FF Councillor, Gannon has been an FF supporter for years as has Seamus Ross.

FF aren't gonna allow their good mates go broke....and if that means pulling a massive stroke on the general populace then so be it.

We have Scoliosis wards (the only ones in the country btw) about to close down in Crumlin Hospital for lack of funding but hey, who the f!ck cares about that!! As long as the builders are ok and property prices are kept artificially high, and the taxpayer is bled dry....sure as Mansergh said

"You should have respect for your betters!"

And hey, 41% of the public were happy to vote FF last time out, so you reap what you sow.
Fianna Fail would abandon the developers if that become politically necessary. Politicians often disappoint their strongest supporters in fulfilling the political role of acting as brokers on behalf of the public in dealing with the various interest groups.
 


Odyessus

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Em, at what point did developers' and bankers' losses become taxpayers' "losses"?

The more light this NAMA thing is exposed to, the more it stinks.

It is a question of whether you make a developer bankrupt and take a loss, or allow him to continue in business to enable him to pay off his debt in full over time.

You cannot have the satisfaction of both bankrupting him and getting all your money back.
 

cactusflower

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It is a question of whether you make a developer bankrupt and take a loss, or allow him to continue in business to enable him to pay off his debt in full over time.

You cannot have the satisfaction of both bankrupting him and getting all your money back.
The bank / bondholders take a loss. Its the risky business they're in and they've made a mistake. For some reason Government thinks that we should pay for it.

If the boot was on the other foot Sean Dunne would not be giving me a bail out to pay my ESB bill.

The Bank Guarantee needs to be amended/removed. That was when the real damage was done. That, and the senseless Nationalisation of Anglo Irish.
 

patslatt

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Zombie NAMA spectre instead of zombie banks

The leading story in today's SBP states:

Quote: ''The country's largest property developers will be protected from collapse by the proposed National Asset Management agency.
Under advanced plans being drawn up by the department of Finance NAMA will agree not to force up to 20 of the country's top developers into liquidation''.

I have long held the view that the setting up of NAMA is going to end up as an unmitigated disaster for this country.How on earth are they going to prevent the top developers from going bust without exposing the taxpayers to a level of dept which we will simply be unable to pay.

Quote: ''Plans are being drawn up to ensure that bad loans taken on by NAMA will be worked out over a period of at least 10 years and that so called 'firesale' of landbanks at knockdown prices will be avoided as officials fear that this would crystallise taxpayers losses''.


One should bear in mind that the country's top 20 developers are responsible for a huge proportion of the toxic debt.I was going to say that the govt do not know what they are doing here.On the contrary it now seems pretty obvious that as far as a bailout is concerned they know exactly what they are doing.

But it will lead this country to bankruptcy.Quite simply this farce must be stopped now.

http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=NEWS-qqqs=news-qqqid=41827-qqqx=1.as



Link will be available at 6:30.
The purpose of setting up NAMA-to prevent zombie banks wasting years nursing hopeless developer loans-may be abandoned even before its set-up. If NAMA goes soft on collecting developer debts and taking possession of developer projects that have defaulted on debt covenants and interest payments as suggested in the SBP articles,doesn't NAMA itself become a zombie? Instead of speedily liquidating over a few years those property developments in default with still good residual values,which would place them in strong financial hands,NAMA may hold them far too long for fear of creating firesales and out of wishful thinking that these developments may recover.

But they are unlikely to recover much in the next five years given the present deflationery trends and the fact that many developments were hopelessly mispriced in the Celtic Tiger bubble. Indeed,prices as shown in infrequent transactions may have a lot further to fall,especially when potential and actual rental yields are unrealistic. For example,investors in buy to lets were satisfied with 2% and 3% rental yields (gross rent divided by house price) when prices were racing ahead in the bubble,but with prices now in a freefall,rental yields need to be maybe 5 to 7% (typical historic rates in the USA),suggesting substantial price drops from here.

If NAMA takes the softly,softly approach,it could cause major problems for the government finances. The bond market,the elephant in the room, could start to regard the €90 billion to be spent by NAMA on acquiring toxic bank properties as an illiquid investment,unlike a speedy liquidation that could pay back substantial portions of the €90 billion. Which could give rise to the suspicion that the €90 billion is worth far less than face values-possibly say only €25 billion?

Another major problem,possibly insurmountable, is how to value bank toxic debts to be acquired by NAMA. At present,valuation experts are refusing to value unit linked property investments,despite the urgency of getting valuations to allow payments to shareholders selling their units. Possibly, valuers fear lawsuits or risk to their reputations in valuing properties where valuations are moving targets.

Developers who have little to lose may resort to litigation under constitutional rights to property to improve the bids from NAMA. With the government under pressure to sort the property market mess,faced with the threat of litigation dragging on for years that could make the Tribunal costs look modest by comparison,NAMA may pay way more than the acquired properties are worth.

The solution I suggested in another post is for three rapid valuations for each property,one each by the bank, NAMA and an independent valuer. Then whichever value of opposing sides-NAMA's or the bank's-is closer to the independent valuer's valuation,wins. This auction process could be subject to an arbitration agreement that prevent any litigation. The valuation methodology should give a heavy weighting to rental yields in the case of high occupancy ratios,otherwise the weighting should emphasise estimated market price,the price that an experienced buyer would pay.
 

Odyessus

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The bank / bondholders take a loss. Its the risky business they're in and they've made a mistake. For some reason Government thinks that we should pay for it.

If the boot was on the other foot Sean Dunne would not be giving me a bail out to pay my ESB bill.

The Bank Guarantee needs to be amended/removed. That was when the real damage was done. That, and the senseless Nationalisation of Anglo Irish.
You misunderstand the whole thing. The banks will certainly take a loss, as will the developers. The guarantee only covers depositors, i.e. people who have lent their money to the banks, not shareholders, i.e. the owners of the banks.

The plan is for NAMA to buy the loans the banks have made to developers for less than their face value, and then to attempt to get back from the developers that amount. If there is a shortfall in the amount recoverable from the developers, the banks will have to pay a levy over time to make up the difference between what NAMA paid for the loans and the amount recoverable.

The strategy is to preserve the banks as institutions necessary for the economic life of the country, not to compensate the shareholders or developers for their poor business decisions.
 

MsAnneThrope

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Does anyone know what the Opposition parties had to say about all this? This is a major development - essentially the bail-out of builders otherwise doomed to go under. What conditions will be attached to any such rescues/concessions/debt deferrals?
 
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Sister Mercedes

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So Anglo-Irish Bank sells €7 billion of its UK assets. Yet Nama continues to sit on its own vast loan & property portfolio.

The sale of a portfolio of IBRC loans valued at about €7 billion has been completed, the special liquidators of the former Anglo Irish Bank said today.
Sale of
 


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